Jersey highlights hedge fund tax benefit

Hedge fund managers who register in Jersey can now do so solely under funds regulations, while avoiding investment business regulations, thereby benefiting from a 0% corporate income tax rate, according to a regulatory update provided by Jersey Finance.

The jurisdiction introduced a Financial Services Law in November, which means that hedge fund managers can avoid investment business regulations if they can meet qualifiying criteria related to managed accounts.

The criteria apply to so called qualifying segregated managed accounts, which enables hedge fund managers to offer managed account services to non fund clients alongside fund clients. To qualify, the managed account must meet criteria relating to initial subscriptions, strategies, custody, and in which name the account is held. Reporting requirements also apply.

Geoff Cook, CEO of Jersey Finance, said that the change in law was expected to encourage growth in the industry, by simplifying the regulatory framework for managed accounts.

“In particular, it is anticipated that the exemption will boost Jersey’s appeal as a centre for facilitating the incubation and hosting of start-up and smaller hedge fund businesses,” he said.

“In addition, the change is expected to prove popular with those Jersey managers who are seeing a rise in managed account business where there is potential to provide investment services to European clients without the need for AIFMD compliance.”